Oil climbs on hopes for output cut

Crude oil prices rose today to their highest in three weeks on hopes for a pact among oil producers to cut output, while the dollar slipped on bets that interest rate hikes by the Federal Reserve would be more gradual than it has suggested.

The rebound in the oil market lifted share prices on Wall Street and other stock markets in another rollercoaster session. European stocks fell on disappointing earnings reports.

The persistent volatility in US and European equity markets underpinned demand for US and German government bonds.

However, gold, normally considered a safer asset in times of turbulence, retreated from 12-week highs.

Russian energy minister Alexander Novak and a senior Gulf OPEC delegate suggested that major oil producers may pare production in an effort to ease a global supply glut that has hammered oil prices over the past year and a half.

It remained unclear whether a deal to cut production by up to 5 percent would be struck anytime soon.

Benchmark Brent futures jumped as much as 8 percent to nearly $36 a barrel before ending up 79 cents or 2.39 percent at $33.89 a barrel. US crude rose 92 cents, or 2.85 percent, at $33.22 per barrel.

Tumbling energy prices, stemming from worries about weakening demand from world No. 2 economy China, have roiled financial markets. This was a concern the Fed cited as a factor for keeping its key policy rate at 0.25-0.50 percent on Wednesday.

The Fed's worry over global and financial developments spurred selling in the dollar against most major currencies as traders reckoned US policymakers would ease back on plans for four possible quarter-point rate hikes for 2016 that they had signaled at their December policy meeting.

The dollar index, which gauges the greenback against the euro, yen and four other currencies, was last down 0.3 percent at 98.576.

The possibility of a slower path for US rate hikes was seen as less welcome by stock market participants. Some had hoped the Fed might put the brakes on raising rates altogether.